According to a report by the Royal Bank of Canada (RBC), high levels of immigration are helping to mitigate the economic impact of Canada’s aging population, although they have exacerbated challenges related to housing affordability.
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Carrie Freestone, an economist at RBC, explained that Canadian retirees continue to consume goods and services, including healthcare, the Canada Pension Plan, and Old Age Security benefits, creating a mismatch between demand and what the economy can produce. As fewer people contribute to public service programs and more people become beneficiaries, the gap between government tax revenues and the money needed to pay for services widens.
“That’s a problem,” Freestone said in an interview. “If we have fewer people working and producing goods and services and more people consuming, there is a mismatch between supply and demand.”
The cap on non-permanent residents means 1.1 million fewer people in Canada by 2027. The report suggests that this cap will result in a 0.9 percent reduction in Canada’s working-age population and increase the dependency ratio, which measures the number of dependents per 100 working-age people.
The federal government limited the admission of international students for 2024, reducing numbers by 35 percent from 2023 levels. It also announced that open work permits will only be available to spouses of international students enrolled in master’s and doctoral programs. The changes were prompted by strains on the economy, including the housing market.
However, Freestone noted that many people are unaware of the economic impact an aging population and low birth rate can have, such as labor shortages. Statistics Canada indicates that 2022 marked the lowest recorded level in Canada’s fertility rate, with only 1.33 children per woman.
Instead, Freestone suggested that an easier way to address this problem is to bring in working-age immigrants, even at a slower pace. “Our population continues to grow every year, and the number of permanent residents continues to increase every year,” Freestone said. “That’s a good thing.”
If you are interested in moving to a Canadian city that offers a high quality of life, contact Become A Canadian. Many people miss the opportunity to immigrate to Canada due to errors in form completion.
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